|Tata Nano – nine lessons to learn for students
History was made on January 10, 2008 when Ratan Tata launched the “people’s car” aptly named “Tata Nano”. It is the cheapest car in the world; but by no means a ‘cheap’ vehicle. It is a full car; contrary to what people assumed, it is not a ‘scooter with four wheels’ or an “auto rickshaw on four wheels” or “two 2-wheelers welded together”. “Tata Nano” is a “grounds up” designed car that has several ‘breakthrough” features; it is powered by a modern 623 cc, 33 bhp engine, optimized using a sophisticated engine management system (EMS); there is a home-grown Engine Control Unit (ECU) that the EMS uses; the efficient engine gives a mileage of 52 miles per gallon or 20 km / liter of petrol; the car can race to 60 kmph in 4 seconds and has a maximum speed of 90 kmph (though 45 kmph is the recommended speed to avoid ‘wear and tear”); its fuel tank can hold 15 liters translating to a payload of about 300 km; the engine is environment friendly and meets Bharat Stage III and Euro 4 emission norms; it will be tested for crash worthiness before launch; the seats are well-designed, with seat belts for the front row;; the dashboard is minimalist, but functional; the body is all-metal; the tires are tube-less; the 4-door car can conveniently seat four passengers, though luggage capacity is less; it has a stylish finish and a cute name too, to appeal to the “Net generation”; and, all this for an unbelievable price of Rs 1, 00,000 (US $ 2,500) at the show room (taxes extra). Interestingly, there are about 40 patents that encapsulate the “intellectual assets” of “Tata Nano”.
Why is Tata Nano launch important?
“Peoples car” has been a dream for many countries. Exactly one hundred year back (in 1908) Henry Ford launched his “Model T” in United States; Volkswagen in Germany had a similar goal when it launched its “Beatle” model; similar attempts made elsewhere include “Citreon 2CV” in France and “Fiat 500” in Italy; Suzuki Motors launched its Maruti 800 in India in 1981. What sets apart “Tata Nano” is the price; in “price parity terms” it is the absolute lowest figure compared to all earlier attempts; for example, the launch price of Maruti 800 in 1981 was Rs 60,000, which in today’s terms would translate to Rs 2,50,000; “Tata Nano” makes a better case, because it has features comparable to contemporary cars, unlike some of its predecessors who had “stripped down” versions of the cars of that age.
Tata Nano will be a car that every Indian (barring the poorest of the poor) will feel “affordable” and will remain an aspiration for billion Indians; “Nano” (one billionth part) captures such a national aspiration very well; with tremendous success of Apple iPod, more specifically Nano Pod, the name “Nano” will definitely appeal to the younger generation.
Tatas today are truly global; Tata Motors itself has plants in India, Thailand, Argentina, Brazil, South Korea and Spain; chances are that over the next decades, Tata Nano will be manufactured at multiple locations in the world. Ratan Tata has been talking of another innovation as well; manufacturing the car using “low cost” factories around the country, where “local technicians” would be able to “assemble” the car; that would be a true revolution in distributed manufacturing. Infosys & TCS pioneered distributed software development; will Indian auto manufacturers pioneer distributed production as well? Only time will tell.
Ford’s “Motel T”, Volkswagen’s “Beatle” and Fiat’s “Fiat 500” changed their countries; it all started with the farmers using these vehicles to move their farm produce. All those countries did not have a road network when the vehicles debuted. It is a different time today (21st century and not 20th century); yet, if “Tata Nano” indeed can ‘mobilize” rural India, surely the country will be in its way to property. People stopping Singur plant in the name of “poor”, would indeed be stopping progress of the poor people; hopefully, they will open their eyes, when the whole world looks at Tata Nano with both eyes wide open.
The “management guru” Professor CK Prahalad, who has occupied the No. 1 slot among “Thinkers” in the year 2007, has been talking of “opportunities thrown up by serving the less-served” what he calls “fortune at the bottom of the pyramid”; Tata Nano clearly addresses such a “fortune”.
There was unprecedented global media attention.
Times of India called “Tata reinvents the wheel”.
Financial Times, UK called it “The new Model T”
Washington Post, New York Times, Chicago Tribune, San Francisco Chronicle, Newsweek, Economist, Forbes, Telegraph UK, Australian Times, and South African Times spanning Americas, Europe, Asia, Africa and Australia had cover stories on “Tata Nano” on Jan 12, 2008 (the day after “Tata Nano” launch)
Tata Nano has a huge potential in terms of market; in USA there is a car for every 3 persons, in India there is a car for every 1,000 people. If every Indian starts driving today’s Tata Nano today, there will be environmental hazard; but Nano over the years will evolve, as Ratan Tata himself mentioned; Nano will look at alternate fuel including hybrid and electric versions. Hopefully, over the years governments will build infrastructure, cities and towns will see planned growth and citizens will develop discipline on the road for safe driving and develop environmental consciousness; one would expect “Tata Nano” to be such a “watershed event” in the growth story of India.
What are the lessons to learn?
Tata Nano is the result of four years of toil for a dedicated team of 500 professionals under the guidance of the design-head Girish Wagh - a whiz-kid designer who worked earlier on “Tata Ace” mini truck and “Tata Indica” passenger car. The Chairman of the $ 50 billion Tata Group Ratan Tata was personally involved throughout. There was considerable skepticism (even ridicule) from the global players. It is to the credit of Ratan Tata and his team that they worked against such adversities with a rare self confidence that did not evaporate in spite of consistent global “disbelief”. Such “endurance” is the first lesson for students.
“Tata Nano” posed several technical challenges; the decision to go for two cylinder engine, introduction of a balance shaft, rear mounting of engine and power train are key design decisions calling for boldness and innovation, the second lesson.
For the “IT crazy” youngsters who limit their vision to “Java” and “c++”, the engine management system (EMS) and the engine control Unit (ECU) of “Tata Nano” have a lot of “software” and “hardware” challenges; one needs to look at IT in much broader terms, the third lesson for students.
Hue and cry was raised against “Tata Nano”; the misguided political establishment is hell bent on stopping “Tata Nano” production in Singur plant; the scientific community had some misplaced criticism; instead of pointing out the need for better public transport, rail & road infrastructure, traffic management and alternate fuels, the environmentalists find fault with “Tata Nano” for making every middle class Indian a potential “car owner”. It is to the credit of Tatas to continue in their pursuit of excellence, in spite of such heavy criticisms; such an unrelenting pursuit of a lofty goal against severe all round criticism is the fourth lesson for students.
Over the past four years, the prices of raw materials (particularly metals) have gone up more than the national average price increase. Yet, Tatas decided to keep the price at Rs 1,00,000. As Ratan Rata himself said “A promise is a promise”, a worthy fifth lesson for students.
Interestingly, Ratan Tata got the inspiration for “Tata Nano” by observing a common scene on Indian roads; in Ratan Tata’s words "I observed families riding on two-wheelers — the father driving the scooter, his young kid standing in front of him, his wife seated behind him holding a little baby. It led me to wonder whether one could conceive of a safe, affordable, all-weather form of transport for such a family”. Such a sight is common all over India; we all see that sight everyday. It is only Ratan Tata who could see a “hidden opportunity” in that sight that “Tata Nano” serves today. Such a keen observation and an uncanny ability to see hidden opportunities, is the sixth lesson.
The marketing communication during launch is the seventh lesson for students. The full page advertisement said
“It is here, the new Tata Nano, to end all speculations, debate and talk”, and “to change the way India travels”
a simple, compelling way to articulate the value proposition and “quietly” silencing the critics. For the less sophisticated, there were just four points
Meets all safety standards
The eighth lesson for students is the way Ratan Tata reacted to journalists about his feelings on “Tata Corus” acquisition Vs “Tata Nano” launch. True, Tata Corus is a huge $ 10 billion (Rs 40,000 crores) deal. According to Ratan Tata “Corus was a transaction; there is a different level of excitement when you are building something”. Students should get this message right. “Creative engineering jobs are no match to “Wall Street” (and “Dalal Street”) analysts’ jobs, however well paying they may be”.
One hopes that Ratan Tata will be the hero of your generation - he speaks your lingo through “Nano” - you should inspired to create something that solves the problem of your country, in YOUR life time. That would be the ninth lesson.